Hard Bargaining

10.19.12

The contract between the University and the Harvard Union of Clerical and Technical Workers
(HUCTW) expired June 30, and with no agreement on a new one, the two
parties have engaged in increasingly public exchanges during recent
weeks—suggesting large economic differences between them. In the past, such negotiations have typically proceeded smoothly, with timely agreement on new contracts.

The fact
sheet on “University finance and pay increases,” published September 26,
begins with a sober note about continued and deepening “negotiating
difficulties” between the union and Harvard. It argues that “The University has
recovered strongly from the financial crisis of 2008-2009”; that the endowment had
strong investment returns in fiscal years 2010 and 2011, enabling Harvard to
increase the level of funds from the endowment distributed to the schools in fiscal 2011 and 2012;
and that it is “clear that Harvard has
entered a new period of confident expansion.”

As evidence of the latter, the
fact sheet points to the continuing reconstruction of the Fogg Art Museum, the
Business School’s rising Tata Hall, the beginning of undergraduate House
reconstruction, and new plans for construction in Allston—each with
multimillion-dollar price tags, and in some cases many times that. The union also
points to the online edX venture, for which the University has pledged to provide
and raise $30 million; the $40-million learning and teaching initiative; and new
courses of study and degree programs. Finally, it suggests that budgetary
caution has eased somewhat, with anecdotal evidence of more relaxed travel and
entertainment spending, computer purchases, and so on.

In this context, the union claims, “There is a troubling
discrepancy between the cautious, pessimistic pronouncements of Harvard’s
leaders and the significant expansion being carried out across the University.”
It then cites 18 years, up to 2009, during which the annual pay increase for
HUCTW members averaged 4.5 percent, and data showing a pay pattern that gave
members real (above-inflation) compensation gains—typically about 1.5 percent
per year from 2002 through 2009. In the subsequent two years, the union says,
wage increases were moderated in response to the financial crisis, and members
realized little if any real income gains. In current negotiations, the fact
sheet concludes, “Harvard staff need to be supported with the kind of steady
salary growth that ensures at least a gradually improving standard of living.”

The healthcare
fact sheet describes the contours of a specific proposal to reallocate the
costs of employee benefits among all Harvard workers. The cost for Harvard
employees to participate in employer-sponsored health coverage is progressive:
that is, the portion of the premium an employee pays rises depending on her or
his wages or salary. For 2012, those pay ranges are less than $70,000;
$70,000-$95,000; and more than $95,000. For example, the monthly cost to an
employee for family coverage in the University’s HMO (the least expensive plan)
would be $210, $290, and $370 respectively.

According to the HUCTW, the employees falling into those tiers
bear, respectively, 15 percent, 20 percent, and 25 percent of the cost of their
health coverage. As health costs have risen, the union argues, “lower-paid employees in the
University have come to bear an unsustainable burden, contributing as much as
10 percent of their gross Harvard pay toward family health plan premiums. At
the same time, higher-paid employees may pay as little as 2 percent of income
or less for the same family plan.” The union suggests that peer institutions use
more sharply progressive formulas, lessening the share paid by lower-income
employees and increasing the share paid by higher-income staff and faculty members.
More generally, the HUCTW says it advocates changes in healthcare payment systems,
investments in wellness and health-education programs, and cost-saving
educational programs. In all, the union says it is “deeply concerned about the
difficulty we have encountered in trying to convince Harvard administrators to
collaborate on long-term health care solutions.”

Almost all of the University’s revenue sources face heightened pressures, from decreased funding for research to the impact of volatile global markets on our endowment. These revenue pressures, combined with the need to make targeted investments to advance Harvard’s academic mission, are likely to have long-lasting implications for the University’s finances.

Over the past year, seven of our other unions have agreed to new contracts that included wage increases between 2 and 3 percent. These were fair agreements that reflected challenging economic times, and administrative and professional employees received an average base wage increase of 2.65 percent. In our discussions with the HUCTW, our offers with regard to wages are clearly consistent with the internal and external job markets.)

Hausammann’s
letter notes that “we typically refrain from discussing our negotiating
position while contract talks are underway,” the better to focus attention on
bargaining. “But now that more than three months have passed since the
University’s contract with the Harvard Union of Clerical and Technical Workers
(HUCTW) expired,” she continued, “I think it’s important to share with you
details about some of the issues on the table and to dispel several
mischaracterizations of the University’s position.”

Wages. Hausammann wrote that

the
average wages and benefits for our colleagues who are represented by the HUCTW
rank in the top 25 percent when compared to workers in similar positions across
the local job market. In other words, HUCTW members enjoy better wages and
benefits than 3 out of 4 workers in similar positions throughout greater
Boston. Base wages for Harvard’s non-union administrative and professional
employees grew by 4.2 percent over the last three fiscal years; HUCTW base
wages grew by more than double that, 9.5 percent, over the same period, at a
time of significant global economic pressures.

But,
she continued, “the University is not immune to market forces,” and cited the
recent report of declining endowment value in fiscal 2012 and pressure on
tuition and federal research funding. Seven other unions, she said, had during
the past 18 months agreed to contracts providing annual wage increases between
2 and 3 percent. In that context, “HUCTW leadership is seeking wage increases
that greatly exceed what our other colleagues across campus, union and
non-union, are receiving.” Harvard’s September 21 contract offer to HUCTW
included a 2.8 percent increase in the first year, 2.5 percent in the second
year, and 2 percent in the third year—the latter subject to re-evaluation and
reopening “if the economy improves sufficiently.” (Since this offer appears
well below the 3.1 percent increase HUCTW says members, on average, received in
2011, that appears to leave a very large gap.) In the Gazette interview, Murphy
said HUCTW members who earn less than $50,000 would realize a pay increase of
about 3 percent in the first year, a rate he said exceeded the rate of
inflation.

Health benefits. Hausammann’s letter cites Harvard's early adoption of progressive payments for health premiums, and its co-pay
reimbursement program for lower-earning employees. But, she wrote bluntly, “one
proposal put forward that we cannot accept would shift more than $1.5 million
in healthcare costs away from HUCTW members and other employees earning less
than $50,000 per year, and onto other Harvard employees. That did not meet our
test for a fair and equitable agreement.” Thus, apparently, the HUCTW proposal for a realignment of the progressive-income tiers, and/or the
introduction of a new, fourth, lower tier, is not acceptable to Harvard.

(In commenting on employee-benefit costs last year, vice president for finance
and chief financial officer Daniel S. Shore said, of continuing increases in
costs, that health benefits for calendar year 2012 therefore
introduced significant increases in employee co-payment, deductible, and maximum
out-of-pocket spending schedules, particularly for retirees. But he
characterized those changes as "modest" and emphasized the need for further steps. That
suggests that the University’s resistance to the HUCTW proposal, which does not
seem to involve a large sum of money, may reflect a separate decision to impose greater
premium cost-sharing on nonunion, higher-income employees—not subject to
negotiation. In the Gazette
interview, Hausammann said, “The changes we’re making to
premiums this year are done in such a way to minimize the effect on employees
earning less than $70,000 per year”—perhaps foreshadowing what is on tap. Open enrollment for employee
benefits in 2013 begins at the end of this month. The cost schedules
accompanying employee options then may reveal whether that is already part of
Harvard’s financial strategy, and therefore an issue that has made the
University resistant to the HUCTW’s cost-shifting proposal—lest a transition to higher premium payments by higher-paid employees be amplified further.)

Hausammann
concluded, “We remain committed to working with the leadership of the HUCTW to
reach an agreement that is fair to employees who are represented by the union
and to employees across the University as a whole. But based on the pace and
substance of the discussions to date, we are preparing for the bargaining process
to continue for some time.” That suggests no ready resolution to bridging
the different positions.